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Amazon.com could sell 3 million to 5 million tablets in 2011, analyst says

August 29, 2011 | 3:31
pm

Amazon.com could end up selling 3 million to 5 million Android tablets before the end of the year if it ends up releasing a tablet costing less than $300 as expected, according to Forrester Research.

"A year from now, 'Amazon' will be synonymous with 'Android' on tablets, a strong second to Apple's iPad," said Sarah Rotman Epps, an analyst at Forrester Research, in a blog post. Addressing rival tablet makers, Rotman Epps said: "If you haven't yet contemplated how Apple-Amazon tablet domination will change your product strategy, now is the time to plan and act."

That's a lot of big talk about a tablet that hasn't yet been released -- a tablet that Amazon hasn't even yet said it's making yet.

Nonetheless, the expectation that Amazon is going to release a tablet of its own is growing. With the sellouts across the U.S. and Canada of the Hewlett-Packard TouchPad as soon as its price was dropped to $99, many now believe that a non-Apple tablet can challenge Apple's iPad if it's priced right.

Many top competitors so far -- such as the Samsung Galaxy Tab, Motorola Xoom and HP TouchPad -- have been priced the same and sometimes higher than the iPad, which in hindsight might have been the biggest deterrent to creating any headway in tablet market share.

Another factor that supports the idea that consumers want a low-cost tablet -- the displacement of Amazon's Kindle as the top e-reader by Barnes & Noble's Nook Color in July, according to market share estimates from research firm IDC.

The $249 Nook Color is usually grouped among e-readers in market share calculations because it has been marketed as a "reader's tablet." But make no mistake, the Nook Color is a tablet, with a 7-inch color touch-screen, 8 gigabytes of storage and a stripped-down version of Google's Android operating system.

With 28.7 million iPads already sold globally to date, Apple's lead in the tablet market looks unbeatable -- but Amazon might be the company to dethrone Apple, if not rise to a strong No. 2 spot, Rotman Epps said.

"Amazon's willingness to sell hardware at a loss combined with the strength of its brand, content, cloud infrastructure, and commerce assets makes it the only credible iPad competitor in the market," she said. "If Amazon launches a tablet at a sub-$300 price point — assuming it has enough supply to meet demand — we see Amazon selling 3-5 million tablets in Q4 alone."

If Amazon can pull in the sales that Forrester projects, Android might have the fuel to upend Apple's tablet app lead as well, Rottman Epps said.

"Apple claims 100,000 custom-built iPad apps, while Google's Honeycomb platform has attracted fewer than 300 apps," she said. "If Amazon's Android-based tablet sells in the millions, Android will suddenly appear much more attractive to developers who have taken a wait-and-see approach."